EDITORIAL: Too many of us doing too little for retirement

12:01 AM, Mar 22, 2013

The U.S. is facing a retirement crisis. The simple fact is that most workers are saving too little to retire, according to the Employee Benefits Research Institute (EBRI), which tracks pension issues. And workers are acutely aware of this.

An institute study out Tuesday found that the percentage of workers saving for retirement dropped to 66 percent from 75 percent in 2009. One-third said they had saved nothing for the years when they were no longer working.

Of those surveyed, 28 percent had no confidence that they would have enough to retire comfortably and 21 percent were “not too confident.” So about half of American workers are facing retirement with considerable economic uncertainty, and with good reason: 57 percent of the workers surveyed reported less than $25,000 in household savings and investments.

Meanwhile, many of those facing a pinched retirement, about 36 percent, planned to work beyond the minimum retirement age for Social Security of 62. But those plans might not always work out. The largest group of retirees does so at 62; only 14 percent retired after 65. EBRI says 47 percent of retirees left the workforce unexpectedly, because of health issues, job loss or disabilities.

Living only on Social Security guarantees a frugal retirement. Benefits max out at $1,320 a month, $15,840 a year, at age 70. And Congress, with Republicans anxious to trim entitlements, may shave that formula for future retirees.

At one time, workers relied on traditional company pension plans, but those have almost disappeared. In fact, EBRI left them out of calculations because only 3 percent of workers are still covered by them.

Those traditional plans have been replaced in part by so-called defined-contribution plans like 401(k)s, but workers tend to dip into them for emergencies and other nonretirement purposes. Retirees can no longer count on high interest rates on their savings to generate income.

Retirement money has to stretch further because we’re living longer. According to a report by the Society of Actuaries, a male who turns 65 this year can expect to live another 20.5 years, a female another 22.7, an increase of roughly a year each over the decade.

The problem is no less real for being slow-moving, but it’s better to deal with the retirement financial crunch sooner rather than later, whether through better savings instruments, more incentives to save or even mandatory savings requirements. As anyone over 65 can attest, you’re old before you know it.